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GM wants banks to finance more subprime buyers

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GM wants banks to finance more subprime buyers

DETROIT — General Motors is looking to boost auto sales by lining up banks and other financial institutions to make loans and lease deals for buyers with poor credit.

The talks lessen the likelihood of GM trying to buy the auto finance business from Ally Financial, its main lender. They also make it less likely that GM would start its own auto financing unit.

GM considered both options earlier in the year because Ally was reluctant to fund loan and lease deals to buyers with subprime credit. About 16% of loans for new cars and trucks went to subprime buyers in the fourth quarter of last year, but because of Ally's reluctance to lend to them, GM was unable to tap that market.

Subprime buyers are customers with credit scores below 620 on a 300-to-850-point scale.

"We are developing relationships with other financial sources on a selective basis for specialized financing needs, such as leasing and subprime financing." GM spokeswoman Renee Rashid-Merem said Wednesday.

GM continues to work with Ally, which used to be GMAC Financial Services, and it already has relationships with many banks and credit unions, Rashid-Merem said.

The automaker's sales are up about 15% through the first five months of the year, but they trail the increase for the overall U.S. industry by more than 2%. Crosstown rival Ford Motor has seen its sales rise 30% compared with the first five months of last year.

Mark Reuss, GM's North American president, said last month that GM would like to tap into the subprime credit market to help lift sales. He said GM gets only 1% of its sales from subprime buyers, while Honda Motor gets about 20% because it has better access to lending.

link:

http://www.usatoday.com/money/autos/2010-06-23-gm-subprime_N.htm

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ZL-1    160

Because the financial crisis had nothing to do with lending to people who could not afford to take on any debt......... Pure genius, GM!

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GENERAL MOTORS ACTIVELY SEEKING FINANCE PARTNER

By Mark Kleis

As General Motors appears to be approaching the crucial point in which it will hold its initial public offering, the automaker is now actively seeking a new partner in a financial institution in order to help secure more sales to customers with lower credit scores.

Leftlane reported on May 17th that GM was in talks with its main financial lending arm – Ally Financial, previously known as GMAC – in regards to loosening credit requirements for its auto loans. the Detroit-based automaker argued that it was leaving sales on the table due to its inability to aggressively finance customers who may not otherwise qualify for loans.

“They’re [Honda] able to finance their cars at a much lower level than we are,” said GM’s N. American president, Mark Reuss. “I’m not sure what the answer is. But it would sure help my sales, the company’s sales in North America, if we were able to get access.” The AP points out that roughly 16 percent of new car sales go to buyers with subprime ratings, effectively reducing GM’s potential client base.

Now, according to the Associated Press, GM has abandoned its efforts with Ally, as well as the possibility of starting a new internal finance arm, and is instead seeking a new partnership with an outside firm.

Analysts at Fox News are suggesting that this move by GM only further solidifies the notion that the automaker is on the path to achieving its IPO. Should GM be able to secure a lending arm that would be capable and willing to finance its subprime buyers, the automaker would appear stronger and be able to drive more revenue from the sale of its shares.

link:

http://www.leftlanenews.com/general-motors-actively-seeking-finance-partner.html

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daves87rs    329

Because the financial crisis had nothing to do with lending to people who could not afford to take on any debt......... Pure genius, GM!

+1

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